* ANZ to start buy-back next month
* Banking analyst expects up to A$2.2 bln more in coming months
* ANZ shares up 1.45 pct (Adds analyst expectations, quote, share price reaction)
By Paulina Duran
SYDNEY, Dec 18 (Reuters) - Australia and New Zealand Banking Group said on Monday it would start buying back up to A$1.5 billion ($1.15 billion) of its shares on-market, as it begins returning surplus capital to shareholders after a series of divestments.
Australia's third-largest bank by market capitalisation sold off its life insurance business for A$2.85 billion last week, following several other non-core divestments across Asia, raising expectations of capital return initiatives.
ANZ said on Monday that as it received the proceeds of the divestments, it would consider further capital management initiatives while ensuring sufficient capital is available to support growth.
The move comes as Australia's four biggest lenders focus on pure banking, and sell off non-core assets under pressure from regulatory capital requirements to slim down.
TS Lim, a banking analyst at Bell Potter Securities, said ANZ should be in a position to release another A$2 billion to A$2.5 billion in surplus capital in the next 18 months.
"The investment thesis has been that they were going to simplify the business and return surplus capital," he said.
ANZ said the purchase of shares may begin next month.
It also said it had completed the sale of its 20 percent stake in Shanghai Rural Commercial Bank.
Last week ANZ struck a deal with Zurich Insurance to sell its insurance arm for A$2.85 billion.
ANZ shares were 1.49 percent higher in early trading on Monday while the broader market was 0.44 percent up.
$1 = 1.3074 Australian dollars Reporting by Paulina Duran in SYDNEY. Additional reporting by Rushil Dutta in Bengaluru; Editing by Stephen Coates